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A web video company that is most likely a hoax (ihatelawyers3.github.com)
261 points by pavel_lishin on Nov 8, 2011 | hide | past | web | favorite | 91 comments

Here's more details: http://www.timothysykes.com/2011/11/how-a-penny-stock-promot...

The RAYS campaign was run by the same guys who did LEXG, the latter being one of the best pump and dumps last year-- ran from $1 to $10 in a short amount of time.

Glad you mentioned Tim here. He's one of about five truth-tellers in that world of scams. Great resource

Timothy Sykes a truth teller? Now I've heard it all...

It means the _normal.mp4 file was encoded in an absurdly high bitrate for no reason except to make their claim of 90% compression.

You hit the nail on the head here. While it's possible that the video they posted is 6fps (which is close to what those mencoder flags will achieve), it's more likely that they simply saved the first video with no compression and saved the second one as a regular video file with compression.

I checked the demo videos:

"Original Version" - 1080p, AVC uncompressed

"Standard Compression" - 480p, AVC uncompressed

"Raystream Version" - 480p H.264 AAC, ~1200kb data rate

Nothing that fishy here. They seem to be advertising to broadcasters. It's possible they have some nice custom algorithms for their videos. That isn't uncommon - take a look at Apple movie trailers and iTunes videos: they have their own magic juice too.

With that, maybe the investment is a scam, but posting a "hoax" via "ihatelawyers3" on github is waaaaaaay more suspect to me.

[EDIT] they seem to be pretty active for being supposedly fake. Check their twitter feed. They tweet as much if not more than most video companies and it's not fluff.

Specifically, the "standard compression" version is MainConcept at 10 Mbit, and the "Raystream" version is x264 at 1.15 Mbit using the following options:

> x264 - core 112 - H.264/MPEG-4 AVC codec - Copyleft 2003-2010 - http://www.videolan.org/x264.html - options: cabac=1 ref=3 deblock=1:0:0 analyse=0x3:0 me=hex subme=7 psy=1 psy_rd=1.00:0.00 mixed_ref=1 me_range=16 chroma_me=1 trellis=0 8x8dct=1 cqm=0 deadzone=21,11 fast_pskip=1 chroma_qp_offset=-2 threads=6 sliced_threads=0 nr=0 decimate=1 interlaced=0 constrained_intra=0 bframes=3 b_pyramid=2 b_adapt=0 b_bias=0 direct=2 weightb=1 open_gop=0 weightp=0 keyint=250 keyint_min=24 scenecut=40 intra_refresh=0 rc_lookahead=40 rc=crf mbtree=1 crf=22.0 qcomp=0.70 qpmin=10 qpmax=51 qpstep=3 ip_ratio=1.41 aq=1:1.00

Also known as...

... the default x264 parameters. Yay!

This is not Reddit

Though I get the impression that there is a big overlap in terms of the people who frequent Reddit, this site and 4chan. They just express themselves differently depending on where they are.

"Custom magic algorithms" in this case being "off-the-shelf free software, using completely default parameters, that we've stolen and claimed is our magic algorithm".

I hate to burst your bubble, but "custom magic algorithms" actually exist. I was involved with a contract that accomplished the same end as mentioned in the article - compressed video data, playable within standard video players. The company wasn't achieving the same level of compression that this article is claiming, but they did manage to reduce video size while maintaining quality.

Sure, you can "improve compression" -- just compare yourself to an awful encoder! This is the strategy used by thousands of marketing whitepapers.

But x264 isn't an awful one; it's the best, by a factor of ~30% over the nearest competition according to the most recent independent comparison (http://www.compression.ru/video/codec_comparison/h264_2011/). Every company loves to claim that their "custom magic algorithms" are amazing and magic, but when push comes to shove, nothing compares to what free software can put out, and this shows no signs of changing, at least before the release of HEVC.

If you have a "magic algorithm" that does better than the current state of the art, send it in to be benchmarked! I mean, if you can do better than the encoder used by Google, Youtube, Netflix, Facebook, and thousands of other companies around the world, surely you'll be able to get some customers if you publicize this super-amazing-magic algorithm, right?

Or maybe, like the thousands of other companies claiming the same, your "magic algorithm" is bullshit -- or a good idea, just already implemented in dozens of other encoders out there too, and you're demonstrating its efficacy by comparing it to a junk heap like Quicktime.

I can assure you that we did our testing against x264, and that we produced encodings that were better than x264. You're also assuming that compression optimization can only occur in the encoder - which I assure you is false (damn you NDA!! You'll have to take my word on these statements.)

As to the business of selling said encoders, I couldn't agree with you more, if you've got something that improves the most widely used encoder then surely customers should be clamoring to get a hold of this algorithm. That is if you're selling it properly.

However, I was merely a contractor, and not making the business decisions. I worked with multiple contractors that thought similar things to yourself (myself included.) And when you're taking investor money, telling them that you're going to open source a technology that took 2+ years to develop, and hope that you'll make money from it is a great way to lose your investor money.

I can assure you that we did our testing against x264, and that we produced encodings that were better than x264

By what measurement, PSNR? x264 doesn't optimize for PSNR by default.

And when was this? x264 has improved dramatically in the past 4 years. In 2007, Mainconcept could beat x264 in many cases and Ateme's 2004 encoder was still sometimes better! There are cases where x264 has improved by a factor of 2 in this time period, or more.

You're also assuming that compression optimization can only occur in the encoder

Do you mean prefiltering? Such a thing is a dishonest comparison, as you can prefilter before using any particular encoder, and there are whole frameworks built for exactly that purpose which are widely used with x264 -- and other encoders too.

And when you're taking investor money, telling them that you're going to open source a technology that took 2+ years to develop, and hope that you'll make money from it is a great way to lose your investor money.

If your technology takes 2+ years to develop, your programmers are incompetent or your management is broken. Probably no single algorithm in x264's history has taken more than a few days to develop. Coming up with good ideas is a matter of thinking, combined with trial and error: once you have a idea that actually works, implementing it is dead trivial. The time-consuming part is the other 99 ideas you tried that didn't work so well -- and you can't plan for that.

I used the term "algorithm" as a crutch, but it seems likely there are tools out there than can do fantastic keyframe & data rate shaping.

The most apparent is whatever Apple's been using for years for their movie trailers. Not a single artifact, low data rate, etc. It's better than your average 2-pass. But who knows, the "magic" could simply be to start with uncompressed source...

> However, I was merely a contractor, and not making the business decisions. I worked with multiple contractors that thought similar things to yourself

Do you know you're not talking to some contractor, you're talking to the guy behind x264?

If you don't know him, read his analysis of VP8 (note copyright footer):


Having been in the streaming industry since the mid 90's, with heavy work in live and on demand encoding, I've seen dozens of these companies make similar claims, usually in pursuit of investment dollars. For years running, regardless of open source versus closed source, none stack up well against x264 when measured for the way people see video and for the resources taken to produce the encoded content.

You really don't have to read past the first graph:


This is an informative study, and has been for the last seven years. If you have a better compression that would let me, as a CDN, offer clients movie delivery to users with enough less bandwidth and storage it's worth retooling for, we're all ears. Again, I've talked to dozens upon dozens. None really had it. So far, given their original source, I could personally produce an even smaller x264 file that end users prefer.

You've just described the business model of a surprisingly large number of consultancies. One man's obvious is the next man's "magic". AFAICT businesses are happy to pay for this sort of thing, so I'm not sure who deserves blame here.

Adds more weight to Asimov's assertion that "any sufficiently advanced technology is indistinguishable from magic".

You're thinking of Arthur C. Clarke: http://en.wikipedia.org/wiki/Clarke%27s_three_laws

H.264 is not "free software." You're thinking of x264, the free software implementation of H.264 that everyone uses.

There is a large market for proprietary optimised implementations of various codecs for use in industry. The same goes for mp3 and so on.

Unless people have found x264 headers left in the files, in which case, fail.

Try clicking on DarkShikari's username.

Nice. :) This made me register an account here at HN so that i can post comment. Thanks for the heads up!

Look elsewhere in this thread. The files have x264 headers.

they seem to be pretty active for being supposedly fake. Check their twitter feed. They tweet as much if not more than most video companies and it's not fluff.

A good pump and dump scam requires a believable company presence. You just fell for the smoke screen.

They seem to have some PR "help" too. For example, this story from "Bedford Research" made the wires and at first glance seems to imply, falsely, that Raystream and Level 3 worked together: http://finance.yahoo.com/news/Breakthrough-Technology-From-i...

There was another PR release that mentioned Raystream and Netflix together, to ever so gently insinuate they were on the same level or somehow related.

You underestimate the power of BS. I worked for a company that raised capital hand over fist and sucked in companies like nobody's business. We could have been doing nothing or been awesome as hell, but it didn't matter- it was all about the slick CEO selling his wares. And in the end, the company still exists even after seemingly burning up in a significant blaze of glory. Money is more important than technology. Unfortunately, many here don't realize that yet.

He could be a short-seller trying to get the stock to tank. This is what is interesting about small-cap public companies, you never know who is telling the truth (since there are so many forces at play from longs, shorts etc.) until you check it out yourself (or somebody you know/trust).

Edit: after checking it out I am 95% certain that this is a fraud. shame there is no stock to short :( (even though it is +6% today)

Here's a comparison of Raystream's "own" encoding side-by-side with their "uncompressed" video after being run through Handbrake with default H.264 settings.


See if you can guess which is which.

I still call BS.

>Before Raystream, a one hour video converted to 720p using the best compression algorithms resulted in files in excess of 1 GB, far too large to be streamed over commercial Internet connections. Using Raystream, the same one hour 720p video can be compressed up to 90% of its original file size, which makes it easily streamable over connection speeds ranging from 0.4 to 1.0 Mbs per second." ... "Raystream compresses online videos, reducing their file size by up to 90%, with no loss in video quality or clarity."

That's not possible unless Raystream developed H.264. Apple uses H.264 for their encoding too. The magic is just H.264.

There's been a number of hoaxes like this previously: http://compressionscams.blogspot.com/ - even down to "software demos" that turned out to be various utilities downloaded from the Internet bolted together (http://www.c10n.info/archives/415)

What is it about scammers and impossibly high compression? Is it because it's easy to explain but hard to prove the concept to non-tech savvy investors, or is it just because they read about it having been done before and copy it verbatim?

Guessing the latter, as there's other technologies (cryptography and semiconductor fabrication come to mind as easy to explain/hard to disprove) that could hoodwink unsophisticated investors.

this guy is a penny stock trader and he called it a pump and dump scam:


This is an obvious case of fraud which the SEC should be investigating:


I've seen quite a number of such "Trader Advisor" Websites and have always wondered - how is their business model anything but a self fulfilling prophecy? I mean - you make a bet on a stock (or manufacture a stock to bet on), but tell an audience to follow your advice, thus increasing demand and drive up the price of the stock.

Seriously - how is this not transparently fraud to people in the stock market? How is this not transparently fraud to everybody, actually? Or is it just praying on the hobbyist investors who are deluded into thinking "get rich quick" works for ordinary folks while the people "in the know" are delighted to have an army of zombies to commandeer?

Would be great to hear if anybody has some insight into how fraudsters like this are prosecuted (or avoid prosecution).

This is crazy... the website is a shell of an investment pitch. These guys need to get reported. Anyone want to make some money off the collapse.

Wow, their first 'contract' is with a company called edgefactory OMNIMEDIA, which I think is owned by martha stewart OMNIMEDIA?

edit: Wow, I just posted a link to this article and this thread on their facebook account and now the item has been deleted off their wall within minutes. everyone should let me know....


The market is way ahead of you man.

"Report" > "Other/abusive content" > "Spam or scam". Done.

that's OMinous...

A simple way of finding out if it's a scam is by looking at the balance sheet. If you see little to no assets it is most certainly a pump & dump; this "firm" has not assets. These scams are usually formed through reverse mergers, that is how they are able to sell stock.

I was involved on some contract work with effectively the same type of technology that Raystream is touting. We didn't hit the kind of compression ratios that Raystream are talking about, but we were able to compress video drastically while still maintaining video quality. That is, the technology is possible, and I've seen it with my own eyes. With that said, the company I was contracting to, could have easily spun the marketing to suggest we were getting 90% compression. To me, it looks like Raystream are making a lot of claims that are half-truths.

Looking at the uncompressed vs Raystream videos, it's difficult to tell if it's doing anything more than h264, x264, or neither. The conclusion being made by the OP may be true, it may not; likely they're exaggerating their marketing to look better than they truly are.

One of the marketing tricks they're using to make their technology look better than it is, is by not showing the videos side by side. Viewing them side by side, it's easy to see that Raystream's video lose quality in their color complexity, image sharpness, and some artifacting shows up if you know what to look for (I can do up some comparison images if anyone is interested.)

When we were testing our compression technology we would run our video through acid tests (difficult video to test the limits of the encoders.) We had a variety of acid tests, and depending upon encoder settings we could tweak each video to look good - however the problem was getting all of the acid test videos to look good at the same settings.

So while Raystream may be able to encode a promotional video that has very low complexity scenes, that doesn't mean this tech is any good at high complexity scenes. In fact, most of the scenes in the promo video our encoders would have had no trouble doing. Things like sports, live concerts, trees, or complex water (the surfer wasn't nearly complex enough, and the original quality of the humming bird wasn't good enough to produce a noticeable difference) were what we used to test our encoders.

I also notice they've got a "Live Streaming" section on their site. On demand content is easy to do, relative to live streaming. For on demand content you have no bounds like cpu, or ram, the biggest barrier is disk io and time to encode. Whereas live streaming is extremely complex. They claim they can do 1.7 Mbs live streaming; we were able to do 1.5 Mbs and less, but at that point the quality suffers significantly, and the video would infrequently go blocky for a frame or two. The only use case is for TVs that no one is going to get close to.

There comes a certain point with this type of technology where you can't stuff a 100 pieces of data, into a container that only holds 10 pieces of data. It doesn't matter how good your compression algorithm is.

Well informed and well put on all points.

Side note: The example streams are progressive download. I pulled one down and had a look. It uses AAC for the audio codec. They are not listed on VIA's licening page. (http://www.vialicensing.com/licensing/aac-licensees.aspx) As a comercial company, they should be hip to this kind of stuff.

Nor does it seem do they have an MPEG-LA license. http://www.mpegla.com/main/programs/AVC/Pages/Licensees.aspx

I'm not making any representations as to Raystream particularly, but it is not true that you can't make fancy encoding algorithms that will then run on a standard codec in a phone. Video standards are decoding standards, and specify what steps the decoder needs to do to take compressed video data and uncompress it.

Of course, this company may be a pump-and-dump, but it is also true that some kind of super-clever encoding algorithm may exist that would be much better than existing encoders and still run fine on existing phone codecs. That is, the fact that they claim an algorithm produces correctly-formatted mpeg is not a disqualifying factor.

That page ends on a cliffhanger - does the hoax.avi look as good as the ray_480p.mp4 or not? How does the framerate compare?

Technically, they could be using pre-compression schemes / filters which modify the source to be more compressible by standard encoders. However, if that was the case, both files should appear to be encoded with the same settings to be a fair comparison.

Step 1: take short position in company Step 2: publish site affirming company is a hoax Step 3: you know the drill

Not that I don't believe it's a hoax...

In 2001, a guy wanted to sell a revolutionary codec: I2BP. He claimed it could transfer 25 images/s and audio in 2ko/s. In France, he got press coverage, and funding. Here is the write up, in french: http://www.transfert.net/a6836 Of course, he was a fraud.


Registrar ID: CORE-123 (Klute-Thiemann Informationstechnologie GmbH & Co.KG)

Created On: 2005-06-16 19:22:24 GMT

Last Updated On: 2011-09-15 12:17:38 GMT

Expiration Date: 2012-06-16 19:22:24 GMT

Status: member-lock

Registrant ID: COCO-10657700

Registrant Name: Roman Rumpf

Registrant Organization: Raystream Inc

Registrant Street: 2101 Midway Road, Suite 140

Registrant City: Carrollton

Registrant State/Province: Texas

Registrant Postal Code: 75006

Registrant Country: US

Registrant Phone:

Registrant Phone Ext:

Registrant Fax:

Registrant Fax Ext:

Registrant Email: roman@raystream.com

My guess, based on the man page for mencoder linked on the page where he got the mencoder options, you can encode a source video file to target video file aiming for either quality of frames, or speed of frames (per second). "Very high quality" options results in a video output of roughly 6 frames per second. Comparing the file size of the output file hoax.avi, its basically identical. So the revelation is that this company's miracle method is simply delivering video at 6fps.

If you've ever played a video game that was too much for your system, you've seen 6fps before, and you know it is intolerable.

That's my take on it, I really wish the author would have elaborated more on the result.

No. They just deliver video compressed with H.264, with a target bitrate of about 1Mbps. The framerate is unaffected.

Hate to sound ignorant, but someone want to explain?

If you encode their test-video with an off-the-shelf open source H264 codec on normal settings, you end up with a video that is smaller than their sample video. Their "amazing new technology" is just vanilla h264 compression.

Seconded. It seems like they basically just turned the frame-rate down, but it's not clear to me.

Raystream was a publicly traded company called InterDom Corp, which was purchased for 200k by Unlimited Trade Incorporated, operated by Ramon Rumpf renamed it Raystream.


All "investment opportunities" in over the counter stocks are scams; there's no real news here.

OP should contact some hedge funds with this info. If true they will be quite interested.

or: http://www.sec.gov/whistleblower

quote: The Commission is authorized by Congress to provide monetary awards to eligible individuals who come forward with high-quality original information that leads to a Commission enforcement action in which over $1,000,000 in sanctions is ordered. The range for awards is between 10% and 30% of the money collected.

this kind of reminds me back the increase your MEMORY BY 8 fold MS-DOS "RAMBOOST" days.

Whoa - thanks for the nostalgia. I remember spending SO MUCH time trying to work around RAM limitations using all these techniques only to find the best you could get was the ability to trick a piece of software into thinking more RAM is there, but the performance hit made it a worthless practice.

Well, under certain circumstances you can swap to a compressed ramdisk. There are ways that that can be helpful.

This stuff is so common it's scary. Just do a search for "penny stocks" and this junk will come right to the top. Sad story

Look them up on Google News. Disgusting.

Doesn't the fact that a stock is traded on an OTC exchange really tell you all you need to know?

<div id="roll" class="">

Revolutionary scrolling banner technology.

Why not buy the stock anyways and sell it right before it gets dumped?

How do you know when it's about to get dumped?

If you're confident it's a pump and dump and it will fall you could short it, of course.


> The police simply aren't interested.

Probably because it isn't their area. Stock frauds and pump-and-dumps should be reported to the sec:


They are getting better at investigating them :)

Not if it's a UK company.

The Serious Fraud Office might be interested. http://www.sfo.gov.uk/

You'd want to contact the City of London Police over here.

I don't think there's any hoax being played here, and I don't think they're fraudsters. I suspect someone simply discovered the various advanced settings of x264 and found out that they can maintain good video quality at "lower-than-common" bitrates, mistaking it all for a flash of brilliance on their own part. Everyone knows that f.e. YouTube aren't really doing everything they can with whatever h.264 encoder they've been using.

Is this a good example of information asymmetry?

It's marketing ignorance: it's like selling a Facebook like button for 1200 euro's as a "social marketing" (true story BTW).

Go on...

My boss as at an internship charged a client 1200 euros for adding a Facebook button. I believe he sold it as a social marketing something or other. He liked to overpromise, overcharge and underdeliver. Oh, and sold stuff we couldn't do. Needless to say the company shrinked by 400% by the end of the internship.

Not anymore, the stock is down more than 50% since 11pm yesterday!

This repo was first created at 8am today though. (https://github.com/ihatelawyers3/ihatelawyers3.github.com/co...)

What's going on here?

Lovely; they'll just start anew with a different company.

Please explain

bash$ mencoder -ovc x264 -oac mp3lame -x264encopts \ subq=6:partitions=all:8x8dct:me=umh:frameref=5:bframes=3:b_pyramid=normal:weight_b \ -o hoax.avi ray_480p_normal.mp4

then o god o god.. is this a porn?

Their proof is an unoptimized video vs an optimized video.

Their product is a standard recommended video optimization.

The people behind RayStream are either lying and/or don't understand what they are talking about.

If it is standard then why the author was surprised by the compression ratio?

Read this page: http://www.mplayerhq.hu/DOCS/HTML/en/menc-feat-x264.html Each of the keys in the string has a value which is explained in the document.

Basically they're claiming something revolutionary, which in the end is just using the x264 encoder with the right fine-tuned options.

They're not "fine-tuned" in the slightest; they're cargo cult options that are going to give worse results on a compression-per-speed basis than the presets that already come with x264. Many of those options are completely redundant; they're specifying things that are already default!

There are quite literally dozens of scam companies built off x264, claiming in many cases that they made an "incredible" magical proprietary encoder with "revolutionary" compression. Of course they just run x264.

Fortunately it is extremely easy to identify an x264-encoded stream, even if all the headers are stripped and rewritten: it would be extremely difficult to modify x264 to cloak such a stream entirely unless you knew the code line for line, and even then, some of the features of x264 that are responsible for much of its compression advantage are extremely obvious in an analyzer (variance adaptive quantization).

Fine tuned in the sense then that it's beyond the defaults.

But it isn't, really. If you want to trade compression for speed, the presets listed on the top of the help page are far more effective.

subq=6 Default is 7. This makes compression worse.

partitions=all Higher than the default, but for negligible gain. This is only enabled on the slowest presets.

8x8dct The default.

me=umh Higher than the default, for small gain.

frameref=5 Default is 3; 5 gives small gain.

bframes=3 The default.

b_pyramid=normal The default.

weight_b The default.

Off topic but, as an EVE player, seeing you denouncing a scam is hilarious.

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